If you’re a small business owner facing the liquidation of your company, you’ll probably have lots of questions about what to expect while going through the process, such as how do you know if you’re making the right decisions and what you can do to make things easier on yourself?
Whether your company liquidation is happening voluntarily, through a procedure known as a Creditors’ Voluntary Liquidation (or CVL), or involuntarily, through a compulsory liquidation, this is something that will be difficult to manage yourself and you should consider enlisting the support of a specialist offering liquidation services to help you navigate the process. Once it’s decided that liquidation is indeed your best option, here’s what you can expect.
Appointment of the official receiver
During the liquidation process, your company assets will be sold in an effort to raise money to pay off as much of your company debt as possible.
This will involve selling all of the business’s property, assets, and holdings. The whole process will be overseen by an official insolvency practitioner, otherwise known as the official receiver.
It is the receiver’s job to ensure that proper procedures are followed, with the end result being the complete closure of the company. After this point, your company will cease to exist.
Disposal of your company assets
The process of liquidating your business assets seeks to turn these assets into cash in order to pay off as many of your business’s creditors as possible.
Your business assets include such items as office IT equipment, furniture, tools and any other equipment that your company owns outright. The money raised from the sale of these items will then be used to reduce or completely pay off any outstanding company debts.
In some cases, the liquidation of these assets may provide enough money to not only pay off your creditors but also leave you with a surplus of cash once all the debts are settled.
What business assets will be liquidated?
To make sure your company recoups as much money as possible from liquidating its assets, an audit will be undertaken of all the physical property that your business owns.
These assets will include:
• Computers and other IT equipment
• Business phones, including landline phones and business mobile phones
• Cash registers and card machines
• Office stationery and supplies
• Company vehicles
• Business property (office building/workshop etc.)
To try and secure as much cash as possible for the settlement of outstanding debts, you should also check to see if you can claim back money on such things as business insurance policies, unpaid invoices owed, prepaid equipment leases and any security deposits that can be paid back to your company.
Company director redundancy
One of the most hard-hitting aspects of going through a company liquidation is the fact that you, as the company director, will be facing redundancy.
No matter whether the liquidation of your company is voluntary or forced, there is little doubt that the process can take a hefty toll on your stress levels and emotional well-being – the loss of your business not only impacts you emotionally, seeing the company you built close down, but it also means that you will be out of a job.
However, it’s not all doom and gloom – as a director on an insolvent limited company you may be able to submit a redundancy claim as part of the business liquidation process.
Your eligibility for this, and the amount of money you get from your redundancy payout, will depend on a variety of factors such as your length of service as a director, your age and the salary you were paid from your company.
It’s a good idea to discuss this option with your insolvency practitioner. They will be able to work out whether you can make a redundancy claim and help you with the claims process.
Getting professional help
As already highlighted, it can be incredibly difficult, not to mention stressful, to deal with the pressure of liquidating your company on your own. It is almost always a better idea to get help from a highly qualified and experienced liquidation professional to manage the process and provide the best advice.
When it’s become obvious that liquidating your company is the only sensible course of action to take, you need to act as quickly as possible in order to minimise any further debts being run up by the company, or the uncontrollable increase of the existing debts already owed to your creditors.
As difficult as this whole process can be, there is some reassurance from having an experienced professional manage everything for you – eliminating any worry about what needs to be done and making sure that, despite the trying circumstances, the best possible outcome will be achieved.
So, if you’re facing significant financial difficulties that are making it difficult for your business to continue and you’re unsure of what to do next, it’s important that you get advice from an experienced professional as soon as possible – with their help, you may even discover that it is, in fact, possible to save your business.